Rob Tolley London - How CEOs Can Get Started Creating an Effective Financial Strategy

One of the most important tasks faced by a CEO is the creation of an effective financial strategy. This sets a vital foundation, enabling the forecasting of income and expenses over the months ahead. It can even act as an early warning system should things get off track.

1. ROB TOLLEY
LONDON
CEO and Co-Founder of Global Specialty Underwriters
How CEOs Can Get Started Creating an
Effective Financial Strategy

2. How CEOs Can Get Started
Creating an Effective Financial
Strategy
OneofthemostimportanttasksfacedbyaCEOisthecreationofaneffectivefinancial
strategy.Thissetsavitalfoundation,enablingtheforecastingofincomeandexpenses
overthemonthsahead.Itcanevenactasanearlywarningsystemshouldthingsgetoff
track.
AfinancialstrategyhelpsaCEOtoidentifythebesttimetostartanewproject,prepare
forcashflowdipsandgettogripswithfundingneedswellinadvance.Inessence,itisan
essentialmeansofassessingprogressandmaintainingaclearviewofpossible
problemsintheroadahead.
FinancialProjections
Monthlyfinancialprojectionscanbedrawnupbyrecordinganticipatedincomebased
onsalesforecasts.Detailsofexpectedexpenses,suchasthoserelatingtolabour,
overheads,andsupplies,shouldbeincludedtoo,aswellasexpensesrelatedto
forthcomingprojects.Abalancesheetprojectionandaprofitandlossstatementshould
alsobepreparedonamonthlybasistocreatethebestongoingoverviewofthefinancial
situationpossible.
SuccessfulCEOssuchasRobTolleyunderstandthattheincorporationofseveral
possiblescenariosintheseprojectionsisahelpfulwayofassessingtheimpactofa
rangeofeventsonabusiness’sfinancialoutlook.

3. How CEOs Can Get Started
Creating an Effective Financial
Strategy
MakingBetterFinancialDecisions
MakinimportantfinancialdecisionsislikelytobearegulartaskforaCEO.Bearingin
mindthefourprinciplesoffinancialdecisionmakingcanbeahelpfulstrategytodeploy.
Thecore-of-valueprinciplereferstotheconceptthatvaluecreationisafunctionof
returnsthataremadeongrowthandcapital.
Theconservation-of-valueprincipledeterminesthatvalueisonlycreatedbyincreasing
cashflows,whiletheexpectationsprincipledetailsmovementsinacompany’sshare
price.Thisprinciplepositsthatthesemovementsreflectshiftsinperformance-related
stockmarketexpectations,notjustthebusiness’sactualperformance.
Finally,thebest-ownerprinciplestatesthatnobusinessholdsinherentvalue.Rather,it
hasavaryingsetofvaluestodifferentownersorpotentialowners.

4. How CEOs Can Get Started
Creating an Effective Financial
Strategy
PlanningforGrowth
Thebestfinancialstrategieswillbelinkedtoandinformedbyanoverallplanforbusiness
growth.Thismeansthatthestrategycreatedshouldincorporateaplanforhowprofits
madewillbeusedandwaystoensurethatprofitmarginsremainhealthy–and,ideally,
increase.Theremitofafinancialstrategyistoprovideanoveralldirectionforthe
business,andincludingplansforgrowthisacrucialpartofthismission.